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Brexit trade deal 'imperative' for UK growth plans, peers warn

A deal to avoid trade tariffs with the EU after Brexit will be imperative as the UK seeks to safeguard its long-term future, peers have warned.

Trade in goods between the UK and the EU - by far its largest trading partner - is worth almost £357bn a year, the Lords EU External Affairs Sub-Committee said.

It said ensuring that key industrial employers - many outside the south east of England - did not face additional trade barriers, was essential to driving growth across the country.

The report comes as separate data showed the imminent triggering of Article 50 was dragging on the jobs market, while elsewhere a new economic forecast warned of Brexit uncertainty.

Foreign Secretary Boris Johnson insisted over the weekend that the UK would be "perfectly OK" without a Brexit agreement, though International Trade Secretary Liam Fox said such a scenario was "not in anybody's interest".

Theresa May has repeatedly said she would rather walk away without a settlement than agree to a "bad deal".

The Lords report said: "The UK's long-term prosperity after Brexit relies on safeguarding UK-EU trade in goods. It is critical that the Government seeks to minimise disruption caused by tariff and non-tariff barriers."

The report warned that tariffs could be "particularly damaging" to the car industry as well as other sectors with supply chains across the EU.

Baroness Verma, chairman of the committee, said: "Goods dominate UK trade, and the EU is by far its largest trading partner. Trade in goods between the two is worth almost £357bn a year.

"It is therefore imperative that a trade deal with the EU seeks to avoid the imposition of tariffs on trade in both directions."

Non-tariff barriers - such as rules determining where a product is made - were also of "pressing concern" to businesses, and would be more difficult to resolve through a free trade deal.

The report added that given the difficulty of negotiating such a deal within two years the Government must try to agree a transitional arrangement.

It came as a poll of more than 2,000 UK employers from jobs firm Manpower showed business hiring at its weakest level since the first quarter of 2014.

ManpowerGroup UK managing director Mark Cahill said: "The impending trigger of Article 50 is clearly affecting confidence on the jobs market."

Meanwhile the British Chambers of Commerce (BCC) upgraded its UK growth forecast for this year from 1.1% to a still-subdued 1.4% thanks to a better than expected end to 2016. But the BCC cut its outlook for 2018 from 1.4% to 1.3%.

It said the "redoubtable British consumer" had buoyed up the economy and could again help it beat expectations but also warned that higher inflation and "increased anxiety around the Brexit negotiations" could dampen growth.